The principle of second best states that
A. the more inelastic the demand for a product, the less distortionary a tax on the product would be.
B. the broader based the tax, the less distortionary it is.
C. taxes should be constructed so that they are neutral.
D. if previously existing distortions exist, a distortionary tax may actually improve efficiency.
Answer: D
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Refer to the figure above. What is the optimal number of machines rented if the market rental price is $5 per month?
A) 20 machines B) 40 machines C) 80 machines D) 100 machines
According to Porter's Five Competitive Forces Model, which kinds of products are most likely to limit the ability of firms in an industry to raise prices?
A) complementary products produced by different firms in the same industry B) similar products produced by similar industries in low-cost countries C) differentiated products that target a small subsegment of the industry D) substitutable products produced by firms in different industries
Monopolies, oligopolies, and monopolistic competitive industries all
A. raise price and quantity over what would occur in perfect competition in order to maximize their profits. B. earn positive profits in the long run. C. are completely unconstrained in their pricing. D. have market power.
______ is produced by an investment of time and other resources in education, training, and experience:
A) Human capital B) Physical capital C) Entrepreneurship D) Technological knowledge